As part of the planning and investment process — and pretty much anything in life — goals are fundamental to thinking about the future. However, very few people take time to set and write down specific goals. And, without a clear plan, you’re more likely to get absorbed in the day-to-day, losing sight of what’s truly important.
“For me, that’s the essence of financial planning. Too often people think about financial planning as just being investments or a calculation to see how much money they need to retire,” says Norman M. Boone, founder and president of Mosaic Financial Partners Inc. “Those are all important, but the greater value of financial planning is making sure you’re on track for the things that are important to you, not just things that you think you should be thinking about.”
Smart Business spoke with Boone about how asking the right questions can help you understand what you want and how to get there.
What is important when setting goals?
When you financially plan, the essence is: Where are you now, where do you want to be and how do you get there? You may have general ideas of your direction, but by writing down and sharing specific goals you are more likely to be successful.
For goals to be effective, they need to be SMART:
• Specific, as opposed to general.
• Measurable. Clear to all as to exactly what is to be accomplished, which usually means you’re able to measure the results or outcomes.
• Achievable, not unrealistic.
• Relevant to your overall role or purpose.
• Time bound. You need to be clear when you are going to finish.
How do you figure out your priorities to start goal setting?
You can use George Kinder’s three questions of life planning to find out what’s important to you.
• If you had enough money, how would you live your life? Would you do anything differently?
• If you go to the doctor and find out you only have five years to live, how would you live your life?
• If the doctor tells you that you have one more day to live, what would you think about? What things do you wish you had done, or said? What are your regrets?
These questions give you the incentive to think about your goals in the context of family, career, education, community involvement, friends, loved ones, personal accomplishments, etc. It’s rarely just about money. You find out what you really want in order to see how you go about making it happen.
How does an outside consultant help with seeing priorities and setting goals?
A consultant can help set up a plan that puts you on track toward accomplishing your priorities. Just like someone on a diet or an athlete in training, it’s hard to push yourself without outside help. You need someone to ask pointed questions, and just as importantly, wait and listen as you contemplate and struggle with the answers.
Almost everyone is too close to his or her own issues, problems and experiences, which blinds him or her to the possibilities. You get locked into what is, and have a hard time imaging what could be. You need that arm's length, 30,000-foot perspective.
Is there a certain time when you should set goals?
At minimum, you need to think about and get help with these kinds of questions at the major turning points in your life — when you finish school, when you get married and start having kids, etc. However, if you do it more frequently, such as once a year, it can be healthy. Maybe you come up with the same thing that you came up with last year and the year before, but maybe you don’t. When you get caught up in the day-to-day, you easily forget the things you’ve said all along were important.
Norman M. Boone, founder and president, Mosaic Financial Partners Inc. Reach him at (415) 788-1952 or firstname.lastname@example.org.
Insights Wealth Management & Finance is brought to you by Mosaic Financial Partners Inc.